Using the CAPM approach, draw the SML$.$ On the same graph, illustrate $($draw$)$ an increase in risk aversion.

Using the CAPM approach, draw the SML$.$ On the same graph illustrate $($draw$)$ a decrease in inflation rate.

Brady Enterprise has a beta of $0\mathrm{.}9,$ the risk$-$free rate is $3\mathrm{.}2\%,$ and the expected market risk premium $5\%,$ Brady Enterprise expected return is $8\%.$

a$.$ Calculate the required return for Brady Enterprise.

b$.$ Comparing expected and required return, determine whether Brady Enterprise is over$/$underpriced and what must happen to the price of the stock.